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City Beat | Will Hong Kong developers who stock up on empty flats push the government into a vacancy tax?

Delicate balance must be struck as officials seek to address public outcry over housing crisis while upholding city’s simple taxation system

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Developers are believed to be holding up to 40 per cent of vacant flats in Hong Kong. Photo: Roy Issa

It’s common sense that when a government turns to taxation for problem-solving, it becomes a double-edged sword that can save or kill you.

One of the beauties of Hong Kong’s set-up, under the “one country, two systems” formula, is that it practises an independent taxation policy, which is well-known for being simple but must take reference of “the low tax policy previously pursued”, according to the Basic Law, the city’s mini-constitution.

So what does this mean?

Again, it’s double-edged: on the one hand, the government has the flexibility to impose or abolish any type of tax, duty or rates; on the other, it also has to meet public expectations for the city’s simple and relatively low taxation system to be maintained.

Hong Kong Chief Executive Carrie Lam is considering introducing a vacancy tax on developers who hoard completed flats. Photo: Sam Tsang
Hong Kong Chief Executive Carrie Lam is considering introducing a vacancy tax on developers who hoard completed flats. Photo: Sam Tsang

Of course, how low is “low”, and how simple is “simple” can always be debatable, and the latest situation is worth reflecting upon.

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